Xavier Fontanet, former CEO of Essilor, has just published “Pourquoi pas nous?” with Fayard Editions (120 pages, €14.90). In this book, he explains how countries facing the same debt problem as France, which has gone from 20% of GDP in 1980 to nearly 100% today, have managed to overcome it.
What strategies did they use to tackle their colossal debt, how long did it take, and what were the costs?
At a time when the morale of the French, as well as that of our entrepreneurs, is low, when the deterioration of confidence is escalating and spreading across all sectors of our economy, when hopes of a growth recovery are drifting further and further away, and when the period for national budgetary choices is opening in France, it is interesting to absorb the lessons from other countries, such as Canada, Germany, or New Zealand, by reading this book.
The author emphasizes that there are no right-wing or left-wing solutions. There are those that work and those that do not. Every population, in every country, is ready to make the necessary efforts, provided they are told the truth and the efforts are truly and fairly shared. There should be a concern to protect the weaker without dispossessing the richer. There should be a will to not penalize entrepreneurs while asking businesses to become increasingly civic-minded. The State should establish conditions that are attractive both for labor and capital. And public activity should bear efforts as significant as those it demands from private activity.
These are the general lessons to be learned from the various experiences described. More specifically, what choices were made in our three examples, keeping in mind that practices and institutional traditions differ in each country.
In Canada, the central choice was a very substantial reduction in expenses and a very slight increase in taxation, whereas in France, we have done exactly the opposite. In Canada, the cost reduction amounted to about 80 billion on a sovereign budget of 400 billion, as the cost reduction only concerned the State, not the social or health system. In contrast, the French plan envisages a saving of 50 billion on a total of €1,150 billion in expenses, including sovereign, social, and territorial expenses.
In Germany, the government’s choice was to restore confidence by focusing all efforts on employment policy. Thus, the Germans first streamlined the labor market by creating eighteen-month fixed-term contracts and public or private ‘minijobs’ (€400 for 15 hours per week, with no charges for the employee, 20 to 30% for the employer). Meanwhile, in addition to creating a generalized auto-entrepreneur status, the services of the Ministry of Employment, as well as unemployment benefits, were reorganized.
Finally, New Zealand’s choice focused on privatizing the health system. The principle is that every citizen must be responsible for their health insurance. On the one hand, the government replaced state social security with competing private insurance companies, and on the other, significantly lowered taxes. Thus, everyone becomes free in their health choices, knowing that the poorest may be entitled to personalized aid and that the most serious operations remain under the state’s responsibility.
There would be much more to say about each of these three examples. But the idea, as the author indicates, is to move from a system of rights to a system of duties.
To read. To ponder.
Richard Pogliano
President of the Cercle de Nice
